Proposed Compact Offers Online Ed Common Market

A proposed compact among the states unveiled by educational organizations and state officials would create a kind of common market for online education and make it easier for institutions to enroll students anywhere in the country.

The proposal would also set some uniform consumer protections, which could give students in some states more recourse to complain to regulators, though it could weaken state oversight in places that already have strict rules.

Nearly 7 million U.S. students are currently accessing college courses online, but the regulations that authorize the universities and companies that provide those courses to operate vary from state to state. Many date to the pre-Internet era when colleges operated only in the state where they maintained a physical presence.

That confusion has somewhat hampered the spread of online options for students. While most for-profit and large non-profit online providers have invested the time and money — in some cases millions of dollars — to get approval to enroll students in all 50 states, others have turned away students from states like Arkansas, Minnesota and Massachusetts where the barriers to gaining approval to operate are higher. The system has also sowed confusion over such issues as what happens if students move to a state where the institution isn’t approved.

Another cost to the patchwork has been confusion over jurisdiction when students want to complain to regulators about a program based in another state. Currently, many states don’t have a way for students to complain about distance education, said Peter McPherson, president of the Association of Public and Land-grant Universities, one of several organizations that developed the proposal.

The proposed compact — a kind of treaty among the states —will require voluntary buy-in from all the states, which in some cases will require legislation. Some states that imposed tighter requirements may prove reluctant to join. But organizers said the agreement represented extensive work with input from all constituencies, and they were hopeful that representatives of 47 states meeting in Indianapolis would start taking steps to implement it back home.

“We don’t have any indication of states that say, ‘I’m all against this, I’m not interested,’” said Paul Lingenfelter, president of SHEEO, a group of state higher education officers. “But in the end they’ll make their own decision.”

The plan calls for something akin to what states do with driver’s licenses — agreeing to recognize credentials issued by other states. Georgia, for instance, would agree to allow a California-based online education provider to enroll Georgia students so long as the institution was authorized by California.

The most important novelty in the compact is that regulators in, say, California would agree to address complaints brought by students elsewhere against California-based institutions. If they failed to do so, they could be expelled from the compact.

The compact would also regularize what it takes to get approval to operate in any state. The proposal borrows, for state licensing purposes, requirements by accreditors and the federal government for quality assurance and financial stability that institutions must already meet to receive federal aid. For instance, to get federal aid, institutions must disclose policies about things such as costs and refunds. Now failure to meet those and other requirements could cost institutions not just access to federal dollars, but a license from their home state to operate at all.

In the states that have provided little oversight of distance learning, that threat could amount to a new and tougher layer of state-level accountability. But states that have imposed more stringent requirements on institutions may have to loosen their grip, said Michael Goldstein, an attorney in Washington who specializes in higher education.

“This is a minimalist approach,” Goldstein said. The education groups that have pushed the proposal are “not looking to increase regulatory burden. To the contrary.”

George Roedler, who oversees registration and licensing for the Office of Higher Education in Minnesota — a state considered to have strict requirements — said his office was monitoring this and other proposals.

“We’re interested in it, but we have to see what the final form is,” he said. “Ultimately, it’s the legislature that will make the call.”

Asked if he was worried Minnesota might have to accept lower licensing standards, Roedler said, “Obviously, that’s always a concern.”

Richard Garrett, vice president and principal analyst at Eduventures, a research and consulting firm, said students have still had plenty of online options, so while they could have more if the compact goes into effect, the effect would not be dramatic. But “hopefully this will force the states to arrive at a happy medium,” he said, modernizing outdated regulations but “forcing states with a very light touch to come up to standard.”

The compact would not affect international students taking courses from U.S. providers, nor would it affect the popular Massive Open Online Courses, or MOOCs, offered by elite universities through platforms like edX, Coursera and Udacity. Those platforms aren’t accredited themselves, and the courses generally aren’t taken for credit. They’re also free to the public, so the consumer protection rules wouldn’t apply, Lingenfelter said.